Disinvestment more about reforms than fiscal management: DIPAM Secretary

Disinvestment should be looked at more from the angle of reforms, rather than fiscal management, DIPAM Secretary Tuhin Kanta Pandey told India Inc

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A file photo of Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey

New Delhi: DIPAM Secretary Tuhin Kanta Pandey on Wednesday asked the private sector to explore investment opportunities in CPSEs being put on the block for privatisation, and asserted that disinvestment should be looked at more from the angle of reforms, rather than fiscal management.

The performance of CPSEs has improved because of corporate governance practices, and their shares are giving better returns to shareholders as compared to the benchmark stock market indices, he said.

Observing that Indian companies have come of age and are managing complex businesses both in India and abroad, Pandey said they need to look at brownfield acquisitions which will bring in gains in terms of increased production, and job creation.

“So, therefore, the present context of economy, where we want to go for capital formation, growth and look at this decade as India’s decade, we now need to unshackle the investment opportunities. And one of the investment opportunities is from the brownfield,” he said.

The statement comes a day after Finance Minister Nirmala Sitharaman asked India Inc to shed hesitancy and take investment decisions without doubting its own capabilities.

“I would equally want to know from the Indian industry what is it they are hesitant (to invest) . We will do everything to get the industry coming and investing here… I want to hear from India Inc what’s stopping you?,” Sitharaman had said.

“Is it like Hanuman? You don’t believe in your own capacity, in your own strength and there got to be someone standing next to you and here you are Hanuman, do it? Who is that person going to tell the Hanuman? It can’t certainly be the government,” she had said on September 13.

DIPAM’s PSU disinvestment list

DIPAM has lined up over half a dozen companies for strategic sale. These include BEML, Shipping Corp, CONCOR, Vizag Steel, IDBI Bank, Nagarnar Steel Plant of NMDC and HLL Lifecare.

Giving the example of the privatisation of Air India and NINL and their turnaround plan, Pandey said the private sector is more forthcoming in efficiency, decision-making and nimble technology.

Pandey said there are many ongoing CPSE strategic sale transactions for which land and other non-core assets have to be demerged. “Some of the key ongoing transactions have this demerger already done or in advanced stages and following which we would be able to invite financial bids,” he said.

The process of demerger in the case of Shipping Corporation of India (SCI) and BEML is at an advanced stage, while in the case of NMDC’s steel plant it would begin once the plant is operational.

He said the government is looking at corporate governance in CPSEs, consistent dividends, disinvestment in a nuanced way, and focussing on privatisation transactions to get value for money and that is getting reflected in share price performance. “I think, overall we should not look at disinvestment for merely an angle of plugging fiscal resource gap and creating shareholder value,” Pandey said.

In 2021-22 as against 18.30 percent increase in BSE benchmark Sensex, the BSE CPSE index has increased 27 percent. Similarly, the NSE CPSE index has given 40 percent returns, outperforming benchmark Nifty returns of 18.88 percent. The trend in share price return is continuing in the current fiscal, Pandey said.

(With PTI inputs)

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